Balancing FATF Mandates Against Constitutional Safeguards Under India’s PMLA
Kiran Wagaj, New Law College, Pune
Dr. Jyoti Dharm, New Law College, Pune
ABSTRACT
The global fight against money laundering has increasingly shaped domestic criminal justice systems. The Financial Action Task Force (FATF), the principal international standard-setting body for combating money laundering, terrorist financing and proliferation financing, has significantly influenced legislative and institutional responses across jurisdictions. India’s Prevention of Money Laundering Act, 2002 (PMLA) is the principal legislative framework through which India seeks to prevent the laundering of proceeds of crime, enable the attachment and confiscation of illicit assets, and fulfil its international commitments.
The PMLA, however, operates at the intersection of two competing imperatives: the State’s obligation to protect the financial system from criminal abuse and its constitutional obligation to safeguard individual liberty, fair procedure and due process. Several provisions of the PMLA- particularly those relating to arrest, bail, the reverse burden of proof, search and seizure, property attachment and admissibility of statements—have therefore sparked significant constitutional debate.
The Supreme Court’s decision in Vijay Madanlal Choudhary v Union of India substantially upheld the architecture of the PMLA, emphasising the seriousness of money laundering and India’s international obligations. Subsequently, decisions such as Pankaj Bansal v Union of India, V. Senthil Balaji v State and Tarsem Lal v Directorate of Enforcement have reinforced procedural safeguards for arrest and personal liberty. These developments demonstrate that FATF compliance cannot independently justify overriding constitutional guarantees.
This paper argues that FATF standards should be understood as international regulatory standards rather than constitutional commands. India may legitimately adopt stringent anti-money-laundering measures to meet international standards, but such measures must remain subject to constitutional limitations, particularly Articles 14, 20(3), 21 and 22 of the Constitution. The appropriate approach is therefore not to choose between FATF compliance and constitutionalism, but to construct an AML framework in which effectiveness, proportionality, accountability and fundamental rights operate together.
